If elections are around the corner, an increase in dearness allowance cannot be far behind. This is the simple principle on which governments in India function, doesn’t matter which party runs the government. Thus, there is nothing very surprising about the decision of the Bharatiya Janata Party-led government to increase DA to its employees and pensioners by 3 per cent. What is remarkable is that it comes close on the heels of the announcement in July this year that DA would be frozen. The Union cabinet has thus gone back on its earlier decision. By doing this, the cabinet has only followed in the footsteps of the chief ministers who in their conference last week vetoed the proposal to freeze DA. The reversal by the Union cabinet and the lack of enthusiasm on the part of the chief ministers must be seen in the context of the forthcoming elections in 10 states. Neither the parties that run the state governments nor the BJP are willing to run the risk of alienating their employees and pensioners by freezing DA. The decision to hike DA by three per cent will cost the exchequer Rs 1,070 crore in a full financial year and approximately Rs 720 crore this year. This payout will come at a time when the prospects for the fisc are not particularly bright.
This tendency to pamper the electorate by doling out money to them even when such a step is not warranted by the resource position. But the Indian political class has thrived on this. Thus despite the many names that the various political parties bear, and the various ideological flags that they wave, they have one thing in common: their unwavering loyalty to populism. This overpowering urge to buy votes by extending economic privileges has done immense harm to the economy. It also reflects the failure of political parties to reach out to the people in any other manner and to convince them that at times the priorities of fiscal discipline must prevail. Political parties thus shirk away from hard decisions and invariably take the soft option of populism. To an extent, of course, the phenomenon of populism is rooted in the problem of democracy in a country blighted by illiteracy and poverty. Voters cast their ballots often in response to promises made rather than in terms of the intrinsic worth of the promises. Politicians driven by the lure of office do not take risks and are averse to articulate a different political idiom. Thus populism thrives with its ominous implications for the economy. This situation may be beneficial to the politicians, but it explains why India remains a laggard in the race for economic reforms and development.